I became the Leadership Editor of Forbes in December 2008, just as the American business world was crashing down and taking the jobs and homes of millions with it. Had I started the job a year or two earlier, I might have found that covering things like how to be a manager, corporate strategy, risk management, governance, and corporate social responsibility was worthy but possibly sometimes a little dull. Now I found that my beat was everything that had gone terribly wrong and was going to have to go very right to get us all back to prosperity. Since then, I've had the pleasure of publishing some of the world's best minds on every aspect of leadership.
Previously I was a senior editor of Forbes magazine, and before that I was for many years the managing editor of American Heritage and the editor of the quarterly Invention & Technology. I've emceed the annual induction ceremony at the National Inventors Hall of Fame, done the play-by-play over the P.A. system on a cruise ship as it passed through the Panama Canal, and written on the history of bourbon whiskey and the making of Steinway pianos, among many, many other things. I prepared for all that by majoring in music in college and writing a senior thesis on the music of Hector Berlioz.
Follow me on Twitter here.

How to Create the Next Silicon Valley

People everywhere keep trying to ­duplicate the success of Silicon Valley as an incubator for innovation and wealth. Victor W. Hwang, a Los Altos Hills, Calif., venture capitalist, has been studying what makes the Valley succeed and so many of its imitators fail, and he’s convinced he has found the answer. Not only that, but he’s putting his ideas to the test, trying to foster new versions of the place around the world. How? It’s about how people work together.

“Instead of thinking of Silicon Valley as this exceptional place,” he says, “think of it as a result of the world’s biggest experiment—the opening of the American West. Take people running away from the rest of the world, strangers with diverse experience and talent, and what happens? What emerges is a body of culture and invisible rules, and a mechanism for trusting strangers.” We think of the Wild West as a lawless place, but it was the opposite, Hwang says. And the same goes for Silicon Valley. Both relied on people from vastly different backgrounds and places, driven by passion, coming together to build environments of unusual trust and mutual support.

At age 40, a product of Harvard College and the University of Chicago Law School, Hwang has spent five years as the managing director of T2 Venture Capital, where he has been involved with numerous startups. Trust in Silicon Valley “happens in a million microtransactions,” he says. “It’s sort of understood. In other places they’d think you’re a fool. An entrepreneur in the Midwest will ask you to sign a nondisclosure agreement before he’ll say what he’s doing. In the Valley he’ll blab, he’s so excited. That N.D.A. is a waste.”

Hmm. Doesn’t sound like the sort of argument you hear in multibillion-dollar tech-related patent disputes. But Hwang argues that to develop networks of innovation, you must build “tribes of trust.” His set of rules he has entrepreneurs and investors and others sign: 1) Thou shalt break rules and dream. 2) Thou shalt open doors and listen. 3) Thou shalt trust and be trusted. 4) Thou shalt experiment and iterate together. 5) Thou shalt seek fairness, not advantage. 6) Thou shalt err, fail and persist. 7) Thou shalt pay it forward.

“On the Palestinian West Bank we’ve helped shape the work of 15 to 20 startup companies, in a fairly isolated place,” he says. “In Bogotá my partner, Greg Horowitt, helped organize a convening point for the ­entire startup industry.”

Where else should we look for future Valleys? The best places are refugee economies, where people have had to start from scratch. That’s why Israel has become so innovative, Hwang says: “Israel’s an interesting dichotomy, a zero-sum culture of tough negotiators but with a startup community based on collaboration and trust. The kibbutz was the foundational culture.”

Which American businesses get this right? Pixar. “They were so afraid of ­becoming big and successful, they designed everything around a culture of continuing nascent creative talent. Also a lot of ad agencies. They have had to systematize the process of creativity.”

Hwang and Horowitt just published a book, The Rainforest: The Secret to Building the Next Silicon Valley (Regenwald, 2012). The title reflects their belief that you have to see the Valley and the relationships it requires as a living environment, not an economic system. But isn’t a rain forest a place of brutality and lawlessness? “When we were in a natural state we all lived in highly trusting communities,” Hwang insists. “This actually reflects how human nature was at its inception.”

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Need an extra job? Your salary can’t cover all your needs or needs of your children? Let us work together and that won’t be a problem for you no more! We run a serious online business and we are having a job openings for new employees. If you can copy and paste data then you are in luck, you are just what we need… You can earn as much as 250$+ a day or even more if you give your best. But be advised it’s not so easy job as it sounds at first, so inform yourself first… Maybe you are not cut out for this job But then again maybe this is just what you were looking for to earn some money. You decide… Visit our website for more information and to apply for position. |||||>>>> goo.gl/3LnVS

In short, Silicon Valley is a state of mind and not a geographic location. (Duh?)

The irony seems to be that the (seven) founding principals mentioned (in the article) are not the types of things being taught in Capitalism 101. In fact, one could argue that a kibbutz is closer to socialism than (Darwinian) capitalism.

It’s certainly not the kind of extreme classical economics that treats people entirely as mechanical economic calculators and not at all as fallible humans driven by instinct and learning and fear and desire and psychology.

I think one of the main differences is a matter of means, ends and by-products. To The Valley types the means is “team”, the ends is a successful product and the by-product is wealth. To the Capitalist it’s capital, capital and more capital. You’d think there’d be a war between the two, eh?

What will be interesting is when the innovators turn their energies “inward” and decide to reinvent the traditional Wall Street model. Then what? I caught (VC) Fred Wilson at a seminar at Princeton Univ a couple months back and while he didn’t say it outright, he certainly did a good job (unintentionally?) implying that things are going in that direction. Yes, perhaps it’s time.